The Punjab Government recently declared that the state would become power surplus by 2013-14. The state hopes to add capacity of 2920 MW during this period. The unexpected problem of inadequate coal supply to run these units on full load may shatter governments dream.

According to official sources at present three thermal plants are under various stages of construction. The commissioning of thermal units is likely to start from August 2013. The commissioning of three units of Talwandi Sabo thermal project has already faced a minimum slippage of one year. As per latest schedule, first 660 MW units is now scheduled for August 2013, second in December and last in March 2014.

Talwandi Sabo Power was awarded a 3x660 MW generation project through the case-II bidding process based on coal linkage provided by the Government of Punjab. The company was assured that it would get 7.72 million tons per annum (MTPA) (E Grade) coal from Basundra coal fields of Mahanadi Coal limited. However, the Letter of Assurance (LoA) was only for 1,800 MW against the plant capacity of 1,980 MW. Moreover the LoA empowers MCL to supply F Grade instead of E Grade Coal. To make things worse new Fuel Supply Agreement (FSAs) has now set the trigger value at 80% with tenure of 20 years.

Now Prime Minister's Office has accepted Coal India's plea to meet only 65 per cent of the coal requirement of power plants, instead of 80 per cent as proposed earlier. This move will be "disastrous" for the generation sector. CIL will supply coal to power plants at 65 per cent of their requirement for the next three years and gradually increase it to 72 per cent in 2015-16 and 80 per cent from 2016-17 onwards.

The power company may have to import coal to bridge the gap between coal requirements and coal supply by Coal India. This will lead to increased generation cost.

Similar will be the fate of Rajpura thermal plant with two 700 MW units. The Letter of Assurance (LoA) for coal allocation to this project issued by Southeastern Coalfields Ltd. from Korba Raigarh fields is for a capacity of 1,200 MW. This amounts to a quantity of 5.55 MTPA for F Grade for run of the mine coal. The company needs 7.76 MTPA instead of the allocated 5.55 MTPA. The commissioning of units is scheduled for commissioning in 2014.